Which of the following statements is FALSE?
A) Under the step-down method, after allocating Service Department 1 costs to Service Department 2, we do not allocate any costs back to Service Department 1.
B) Under the step-down method, we ignore services provided by a service department to itself.
C) The total amount of service department costs allocated to user departments is the same for the step-down and direct methods.
D) Under the step-down method, the first service department to allocate costs to the user departments is the one that provides the most service to the producing departments.

Question

Quizplus · Accepted Answer

The step-down method does not necessarily start with the service department providing the most services to the producing departments; it can start with any service department based on the allocation sequence chosen by the organization, which might not always be the one providing the most services.

Which of the Following Statements Is FALSE